UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
RELEASE NO. 40952 / JANUARY 15, 1999
ACCOUNTING AND AUDITING ENFORCEMENT
RELEASE NO. 1100 / JANUARY 15, 1999
ADMINISTRATIVE PROCEEDING FILE NO. 3-9004
________________________________
:
In the Matter of : ORDER
GRANTING APPLICATION : FOR REINSTATEMENT TO PRACTICE
Frank E. Stephan, C.P.A. : AS AN ACCOUNTANT BEFORE THE
: THE COMMISSION
:
________________________________:
On May 16, 1996, Frank E. Stephan ("Stephan"), a certified
public accountant, was suspended by the Commission from practicing
as an accountant before the Commission in public administrative
proceedings instituted by the Commission against Stephan pursuant
to Rule 2(e) of the Commissionís Rules of Practice[1]. This order
is issued in response to his application for reinstatement to
practice before the Commission.[2]
Stephan worked as a temporary employee of the audit firm
Glasser & Mermelstein ("G&M"). G&M, under the direction of Milton
Mermelstein, conducted an audit and issued an unqualified audit
report on the 1990 financial statements of Everlast Filtration
Corp. ("Everlast"). Stephan served as the on-site auditor for the
1990 Everlast audit.
The Commission found that Everlastís 1990 financial
statements were not presented in conformity with generally
accepted accounting principles and that G&Mís 1990 audit was not
conducted in accordance with generally accepted auditing
standards. Certain members of the management of Everlast
consented to cease and desist orders in connection with these
false financial statements. Mermelstein, the partner in charge of
the 1990 audit of Everlast, consented to an anti-fraud cease and
desist order and a Rule 2 (e) order denying him the privilege of
appearing or practicing before the Commission, with the right to
apply for reinstatement after five years.
Stephan consented to the settlement of Rule 2(e) proceedings
and to a suspension from practice as an accountant before the
Commission, with the right to apply for reinstatement after two
years upon meeting certain specified conditions.
In connection with his request for reinstatement to practice
before the Commission, Stephan has represented as his undertaking
that if he is reinstated to practice before the Commission as a
preparer or reviewer, or a person responsible for the preparation
or review, of financial statements of a public company to be filed
with the Commission, such financial statements will be reviewed by
the independent audit committee of any company with which he is or
will be associated, or in some other manner acceptable to the
Commission.
On the basis of information supplied by Stephan, it appearing
that Stephan has complied with the terms of his suspension from
practice before the Commission, that no information has come to
the attention of the Commission relating to his character,
integrity, professional conduct or qualifications to practice
before the Commission that would be a basis for adverse action
against Stephan pursuant to Rule 102(e) of the Commissionís Rules
of Practice, and that Mr. Stephanís offer to condition his
reinstatement is fair and in the public interest, it is
accordingly,
ORDERED pursuant to Rule 102(e) (5) (i) of the Commissionís
Rules of Practice that Frank E. Stephan is reinstated to appear
and practice before the Commission as an accountant responsible
for preparing or reviewing the financial statements of a public
company to be filed with the Commission subject to the undertaking
set forth above; provided, however, that if it should subsequently
appear to the Commission that any information that has been
provided by Stephan in connection with this application or any
other Commission proceeding was false or misleading, then the
Commission shall have the right to reopen this matter and
reconsider whether reinstatement should be granted.
By the Commission.
Jonathan G. Katz
Secretary
**FOOTNOTES**
[1]: The institution of public administrative proceedings and the
settlement and suspension of
Stephan were announced in AAER 783.
[2]: Rule 2(e) has been recodified in its entirety as Rule 102(e).
Rule 102(e) (5) (i) provides:
An application for reinstatement of a person permanently suspended
or disqualified under paragraph (e) (1) or (e) (3) of this section may be
made at any time, and the applicant may, in the Commissionís discretion,
be afforded a hearing; however, the suspension or disqualification shall
continue unless and until the applicant has been reinstated by the
Commission for goodcause shown. 17 C.F.R. Section 201.102(e) (5) (i).